India Microfinance

Moving microinsurance beyond micro-business

Delivering Value through Clever Distribution

By Anja Smith – Director of the Centre for Financial Regulation and Inclusion (Cenfri)

Internationally, insurers have been experimenting with developing and extending microinsurance products to clients in new and innovative ways during the last decade.

For the ILO and FinMark Trust, I recently had the privilege of studying the alternative distribution experiences of fourteen microinsurance innovators (insurers and their distribution partners) in four developing countries. I was surprised to discover that the absence of client value through distribution emerged as a consistent theme.

For most of the innovators, the emphasis has been on selling rather than figuring out how to deliver value to clients through the distribution process. Almost the only way in which client value has received explicit attention in these models is through the distribution partner’s role. In cases where the distribution partner has an interest in protecting their brand and limiting reputational risk, the business model is able to deliver better value to clients. These partners fight for clients’ interests by ensuring a fair and valuable product as failing to do so now may mean a tarnished brand later.

Client value in the larger distribution process also means clients being able to benefit from the product. Consistent, quick pay-outs matter. Clients want to claim successfully and obtain the benefits of their claim when they need it. In most cases, clients identify the insurance product with the distribution partners’ brand and want to be served by the brand they know and trust.

To meet expectations, we need to start imagining a distribution landscape where some distributors (and their trusted brands) become “one-stop shops”. Distribution partners should not only sell policies and collect clients’ money, but also allow clients to make changes to their policies and become the point where claims are paid. If not, we risk losing client value where it ultimately matters.